Raising the minimum wage has become a progressive rallying cry. While President Obama’s call to raise it to $10.10 per hour throughout the US is a longshot, given the Republican House, many states have either raised their wage or are considering it. Minnesota is contemplating raising our minimum wage to $9.50 per hour by 2016, possibly indexed to inflation afterwards, and it is likely to pass.
What is the net effect on the economy? An analysis of the net effects was prepared in December and with a little more math it boils down to something no worse than 0.5% of the total economy of the state. It’s a way of looking at the proposal that makes the case against raising the wage much more difficult, although the effects are not felt uniformly throughout Minnesota.